I’ll be giving a talk at the Kogod School of Business on Tuesday February 24th on “Drug Development – Balancing National and Commercial Needs”. The basis of the talk is that countries need access to medicines, foreign currency, and tax revenues, while drug developers need profits (or else they will cease to exist). I’ll be covering strategies used by nations and drug companies to meet their respective needs, and describing case studies in which these needs are at odds with each other, and those in which they coexist in harmony.
Looking forward to a good discussion.
Emergent biotechnology companies are very reliant on capital, often having less than two years capital on hand. Like other businesses with strong needs for cash, one would expect biotechnology companies to be adversely effected by a dearth of capital.
The biotechnology financial crisis and request for pass-forward tax breaks have been covered elsewhere; I’ve been looking for stories of who can benefit from the credit crunch.
While at the Mid-Atlantic BIO a few weeks ago I met a banker who seemed buoyed by the credit crisis. He said that the current environment is the first time in over a decade that he’s been in a position to make substantial loans to developing biotechnology companies. He explained that the relative abundance of private equity had previously prevented banks from being able to make loans on profitable terms, but with private equity being far less available, and a substantial federal mandate to make loans in sectors other than real estate, made for a very favorable environment. It’s worth noting, however, that I have yet to see clear evidence that banks are moving en mass into biotech loans.
For a second perspective, I posted a query regarding the impact of the financial crisis on businesses to the Journal of Commercial Biotechnology LinkedIn Group. It is important to note that there’s a strong bias here: individuals who have been displaced and moved to other industries are unlikely to respond, and those still in the industry and facing significant challenges are likewise unlikely to share their troubles publicly. With those biases in mind, the messages on the forum suggested mild changes such as suppliers increasing their vigilence on invoice payment, and hesitation among small and medium firms feeling the pressure of the credit crunch.
A group which stands to benefit from the financial crisis is large companies with strong cash flows. The ethical drug market tends to deliver substantial profits, with many drugs grossing more than $1 billion annually. To support future revenues these companies invest double-digit percentages of revenues in R&D; but they don’t have to. So, these profitable companies may be able to attenuate their R&D expenditures to accomodate fundraising challenges, and likewise license/purchase products from cash-starved development-stage firms at bargain rates. This notion is reinforced in the article, “Still Afloat.”
I’d like to expand my informal survey. Use the comments to answer the question: How is the current financial climate affecting your business?
I’m working on an International Biotechnology ranking and comparison for a well-known publication, and am looking for data sets comparing biotechnology activities in different countries as well as interesting anecdotes about successes/failures/challenges encountered in developing biotechnology in different countries as well between countries. If you’ve got comparative data sets or interesting anecdotes, please drop me a line.
A lot of people have been asking my opinion on when a concise generic biologic regulatory pathway will emerge in the United States, and I give them all the same answer: Later.
In my opinion complex regulatory schemes are not areas in which the United States can effectively lead. Why not? Because the size of the market makes tracking problems difficult, and implementing regulatory change can be very slow.
As I’ve described before, regulating generic biologics is no easy feat. A good regulatory scheme must address safety issues while enabling productive competition. Failure to accomplish either objective could potentially set the field back by years (consider the field of gene therapy which, despite some early signs of progress, is haunted by the deaths of study subjects).
The United States is the world’s largest pharmaceutical market, and accomplishing regulatory change can be slow. It is not an effective place to experiment with or refine generic biologic approval schemes. That is best left to smaller and more agile countries. Smaller countries often seek opportunities to serve as testbeds for emerging opportunities like alternative fuels, patient tracking, personalized medicine, etc. and will likely be the first places where comprehensive generic biologic regulations emerge (likely supported by consultants and regulators from the U.S. and EU).
The challenge to driving this innovation in smaller countries, however, is that they often lack the very resources necessary to test policy or technology innovations. This is where large nations, the EU, or agencies and organizations such as the WHO, ADB, IMF, etc could be directing their resources to simultaneously help development in smaller nations while supporting innovations offering global benefits, ultimately serving their own interests
I recently had the opportunity to conduct a brief interview with Mireille Gingras, Ph.D. President and CEO of HUYA Bioscience on doing business with and in China:
Tell me about HUYA and what makes the company unique?
HUYA Bioscience International has pioneered the most innovative and productive approach for pharmaceutical co-development between the U.S. and China. We were one of the first companies to recognize the potential of China as a source for novel preclinical and clinical stage compounds. Through our partnerships with Chinese companies and institutes, HUYA can use preclinical and clinical stage data generated in China to guide drug development process in the West. Even though clinical trials must still be completed in the West, the process is streamlined, and risks are minimized because HUYA’s Western pharmaceutical partners will have access to critical data from China. Simultaneously, HUYA provides significant development assistance to our Chinese partners. As a result, I anticipate that HUYA will source compounds in China that may become important drugs globally.
What led you to target China as a source for compounds?
There is an urgent need in the global pharmaceutical industry for fresh new sources of novel compounds. As a licensing consultant for pharmaceutical and biotech companies, I was seeking to find novel preclinical and early clinical-stage compounds in Europe and Asia. Many of us were looking in the same places and the pools of novel compounds were depleted. I subsequently spent time in China meeting with heads of government research institutions, biotechnology parks, incubators and pharmaceutical companies. In China, I recognized that there were untapped and significant opportunities for drug discovery and development. To leverage these opportunities, I formed HUYA Bioscience International. HUYA’s business model, the Integrated Co-Development model (ICM), is designed to reduce the risk and cost of drug development in the U.S. by providing a framework for sourcing, licensing and developing validated, preclinical and clinical stage compounds from China. We currently have two compounds licensed from China that are in preclinical development in the U.S., thus validating our model.
What are the unique challenges/opportunities to developing compounds sourced from China?
One challenge, of course, is the language difference. We must have bilingual staff in both the US and China so that we are confident that our due diligence is performed with the utmost attention to detail. Another challenge is that I must spend a significant amount of time in China. This is crucial for developing trust, forging partnership agreements and licensing compounds. HUYA has the “first mover” advantage in China, having been there now for four years and developing critical personal relationships with the heads of the Chinese research institutions and pharmaceutical companies. The Chinese seem to prefer to do business with people they trust and with whom they have long-standing relationships. No other company has the breadth and depth of relationships that HUYA has developed in the Chinese research community.
Because of these relationships, we are able to take advantage of the enormous opportunities presented by China’s large community of world-class scientists, many of whom were educated in the U.S. and have returned to China to develop their careers. We are also able to draw from the well-established scientific infrastructure in China of research institutes, bioparks, and pharmaceutical companies that provides one of the world’s richest sources for novel compounds.
We have a truly unique opportunity to lower the risks and costs of Western drug development by providing access to data from the Chinese development process. Of course, all of the compounds that are developed in the U.S. will have to go through the same rigorous FDA process that they would have gone through had they been sourced from the U.S., including animal and human trials. But, this process is streamlined, and the risks are minimized because HUYA’s U.S. pharmaceutical partners will have access to critical data from our Chinese partners. For example, a U.S. pharmaceutical company that takes on one of the new compounds has access to efficacy, toxicology, and dosing data from Chinese clinical trials, so the trial is not started from scratch, but can be designed based on the information gathered through the Chinese trial. In addition, the Chinese clinical trial data can be used as supporting data to the FDA process here in the U.S.
For each promising new compound in development, HUYA assembles a world-class team of clinical advisors to direct the clinical trials and ensure that they meet U.S. FDA standards. In addition, because HUYA’s model is to co-develop compounds with our Chinese partners, we can help our Chinese partners design trials in China that will inform our trials in the U.S.
About Mireille Gingras, PhD, CEO and President of HUYA Bioscience International
Mireille is a seasoned entrepreneur, scientist and consultant with wide ranging experience in drug discovery, licensing programs (both in- and out-license), preclinical research design and academic partnering programs for top pharmaceutical and biotechnology companies including Organon, Cypress Bioscience, Phenomix, and GeminX. She has made major contributions to the study of complex addictive diseases, and has led research and drug development efforts in the areas of neuroactive steroids, and neurological and neurodegenerative diseases. Through her extensive work in China with HUYA, Mireille has developed unrivaled expertise in partnering with Chinese research institutions and pharmaceutical companies and building bridges into the Western development process.
About HUYA Bioscience International
The global pharmaceutical industry faces an urgent need for fresh new sources of novel compounds. HUYA Bioscience International, LLC, was one of the first companies to recognize China’s potential to help meet this need through its burgeoning biotechnology industry and world class talent pool. HUYA pioneered an innovative co-development model through which it identifies and licenses the most promising preclinical and clinical stage compounds in China, partners with Chinese research institutions to leverage and extend their research efforts, and provides a bridge into the U.S. development process and the Western biopharma market. Because the compounds have already been validated through a rigorous discovery, selection and development process in China, this model streamlines and accelerates product development in the West, while lowering risk. HUYA is now the leader in U.S./China pharmaceutical co-development, with three strategic offices in China, the broadest Chinese compound portfolio, and more exclusive agreements with premier Chinese biotech centers than any other company. HUYA has joint headquarters in San Diego, California, and Shanghai, China.
My recent presentation at the “Biotechnology for Turkey” conference has been posted online. My central thesis was that the challenges faced by Turkey (and most any other location) are shared by many states within the United States. I’ve heard too many people opine for the seemingly easy start-up environment in the United States. The reality is that outside of the major hubs, biotechnology can be very hard to develop. It can even be difficult within the major hubs. So, instead of looking longingly at the strong position of leading regions in the U.S., why not look at the aggressive strategies being used by developing regions?
Check out my talk here.
I’ll be speaking at the Biotech for Turkey conference in Istanbul on November 7th. This conference, convened by Bosfor Biotech Partners, will cover global biotechnology strategies and developments in Turkey. For more details, contact Bosfor Biotech at the URL above or browse the conference schedule: Biotech for Turkey